Net off a bill and bill credit note

Here's how to show both a bill and bill credit note as settled in FreeAgent.

If you receive a bill credit note from one of your suppliers, so that you don’t have to pay all or part of an bill you’ve already received from them, you’ll want to show both the bill and the bill credit note as settled in FreeAgent.

But there’s no “netting off” mechanism as such.

Instead, you need to enter a dummy payment against the bill and a dummy receipt against the bill credit note.

Here’s how to do that.

1. Dummy payment for the bill

On the list of bills here, you can see a bill for £200 including VAT, and a bill credit note for the same amount. The bill credit note cancels out the bill.

list of bills - bill and bill credit note outstanding

Select the bill to go to it...

list of bills - select bill

...and select the Pay Bill button.

edit a bill screen - click pay bill

Enter a manual bill payment, settling the bill in full, as at the bill credit note’s date, because this is likely to be the date on which you want the net off to show.

Select Create and Add Another, to add another transaction.

selecting a bill payment then allocating it to a bill

2. Dummy refund for the bill credit note

Enter a Bill Refund by creating a manual bank transaction in the bank account. From there, choose 'Bill Refund' from the 'Type' list under 'Money In' and set it to the same date as the manual bill payment you've just added.

Make sure you pick the correct bill credit note from the list. Search for it by contact or reference number, or if you want to search by amount of the bill credit note, put a minus in front of the amount when you search.

Create this entry.

creating a bill refund entry

Opposite entries match up

Once you’ve done this, both the bill and the bill credit note will show as settled, the bill as paid and the bill credit note as refunded, on the Bills screen.

bills screen - bill and bill credit note settled

And if you then go to the Banking screen and select your primary account, you’ll see a receipt and a payment for the same amount, cancelling each other out.

banking screen - primary account - matching money in and money out transactions

That’s it. Job done.

What about bill credit notes that don't clear the bill in full?

If the bill credit note only settles part of the bill, then follow the same steps, but when you enter the bill payment, only enter the amount that’s covered by the bill credit note. This is so that the payment and refund in the bank account are the same. The bill will show as due but it will have a lock beside its name to show that a payment has been entered against it.

bills screen - bill and bill credit note have payments set against them

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